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on Insurance Economics |
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Issue of 2016‒10‒30
thirteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Xie, Zoe; Pei, Yun |
| Abstract: | During recessions, the U.S. government substantially increases the duration of unemployment insurance (UI) benefits through multiple extensions. This paper seeks to understand the incentives driving these increases. Because of the trade-off between insurance and job search incentives, the classic time-inconsistency problem arises. This paper endogenizes a time-consistent UI policy in a stochastic equilibrium search model, where a government without commitment to future policies chooses the UI benefit level and expected duration each period. A longer benefit duration increases unemployed workers' consumption but reduces job search, leading to higher future unemployment. Quantitatively, the model rationalizes most of the variations in benefit duration during the Great Recession. We use the framework to evaluate the effects of the 2009-2013 benefit extensions on unemployment and welfare. |
| Keywords: | Time-consistent policy, Unemployment insurance, Labor market, Business cycle |
| JEL: | E61 H21 J64 J65 |
| Date: | 2016–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74698&r=ias |
| By: | Hu, Luojia (Federal Reserve Bank of Chicago); Kaestner, Robert (University of Illinois at Chicago); Mazumder, Bhashkar (Federal Reserve Bank of Chicago); Miller, Sarah (University of Michigan); Wong, Ashley |
| Abstract: | We examine the effect of the Medicaid expansions under the 2010 Patient Protection and Affordable Care Act (ACA) on consumer, financial outcomes using data from a major credit reporting agency for a large, national sample of adults. We employ the synthetic control method to compare individuals living in states that expanded Medicaid to those that did not. We find that the Medicaid expansions significantly reduced the number of unpaid bills and the amount of debt sent to third-party collection agencies among those residing in zip codes with the highest share of low-income, uninsured individuals. Our estimates imply a reduction in collection balances of between $600 to $1,000 among those who gain Medicaid coverage due to the ACA. Our findings suggest that the ACA Medicaid expansions had important financial impacts beyond health care use. |
| Keywords: | Health insurance; consumer finance; low income; Medicaid; public policy; Affordable Care Act (ACA) |
| JEL: | H42 I12 I18 |
| Date: | 2016–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2016-10&r=ias |
| By: | Juergen Jung (Department of Economics, Towson University); Vinish Shrestha (Department of Economics, Towson University) |
| Abstract: | Abstract We investigate the effect of the extension of the federal dependent coverage mandate for young adults under the Affordable Care Act (ACA) on the college enrollment decisions of young Americans. The ACA removes the conditionality that young individuals need to be enrolled as full-time students in order to be able to remain on their parents' health insurance past the age of 18 and extends the coverage mandate to age 26 irrespective of student status. This expansion of the coverage mandate will change the incentives for the full-time and part-time college enrollment decisions of young individuals. We use panel data from the Survey of Income and Program Participation (SIPP) for the years 2008 to 2013 and estimate that the dependent coverage expansion under the ACA decreases the probability to enroll as full-time student by 2 to 3 percentage points. Furthermore we find that part-time college enrollment is unaffected by the new policy. The results from a difference-in-differences model are robust to changes in the model specification and become stronger when we increase the sample overlap between treatment and control groups using various propensity score methods. |
| Keywords: | Affordable Care Act, dependent health insurance coverage, youth health insurance, occupational choice, educational choice, survey of income and program participation (SIPP). |
| JEL: | C35 I23 I10 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:tow:wpaper:2016-16&r=ias |
| By: | Christian Thimann (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), Axa - AXA, PSE - Paris School of Economics) |
| Abstract: | This paper aims at providing a conceptual distinction between banking and insurance with regard to systemic regulation. It discusses key differences and similarities as to how both sectors interact with the financial system. Insurers interact as financial intermediaries and through financial market investments, but do not share the features of banking that give rise to particular systemic risk in that sector, such as the institutional interconnectedness through the interbank market, the maturity transformation combined with leverage, the prevalence of liquidity risk and the operation of the payment system. The paper also draws attention to three salient features in insurance that need to be taken account in systemic regulation: the quasiabsence of leverage, the fundamentally different role of capital and the ‘built-in bail-in’ of a significant part of insurance liabilities through policy-holder participation. Based on these considerations, the paper argues that if certain activities were to give rise to concerns about systemic risk in the case of insurers, regulatory responses other than capital surcharges may be more appropriate. |
| Keywords: | Systemic risk,Insurance,Financial regulation |
| Date: | 2014–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01074933&r=ias |
| By: | Fabrice Borel-Mathurin (ACPR - Autorité de Contrôle Prudentiel et de Résolution - Autorité de Contrôle Prudentiel et de Résolution, PSE - Paris School of Economics); Pierre-Emmanuel Darpeix (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), ACPR - Autorité de Contrôle Prudentiel et de Résolution - Autorité de Contrôle Prudentiel et de Résolution, PSE - Paris School of Economics); Quentin Guibert (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1, ACPR - Autorité de Contrôle Prudentiel et de Résolution - Autorité de Contrôle Prudentiel et de Résolution); Stéphane Loisel (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1) |
| Abstract: | We use a brand new data-set built from French supervisory reports to investigate the drivers of the participation rates served on euro-denominated life-insurance contracts over the period 1999-2013. Our analysis confirms practitioners’ insight on the alignment with the 10-years French government bond, yet we show that on aggregate, insurers serve less than this target. Our data indicate that financial margins are more strictly targeted than participation. We find evidence that lapses are fairly uncorrelated with participation, suggesting other levers to pilot surrenders. If higher asset returns can imply better yield for policyholders, riskier portfolios do not translate into better participation |
| Keywords: | participation rate,taux de revalorisation,profit sharing policy,life insurance,panel data,regulatory database |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01165475&r=ias |
| By: | Mathias Lé (ACPR - Autorité de Contrôle Prudentiel et de Résolution - Autorité de Contrôle Prudentiel et de Résolution, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics) |
| Abstract: | This paper empirically investigates the bank leverage adjustments after deposit insurance adoption. Banks are found to increase significantly their leverage after the introduction of deposit insurance. However, the banks’ responses appear to be heterogenous. The magnitude of the change in bank leverage decreases with (i) the size, (ii) the systemicity and (iii) the initial capitalisation of banks so that the most systemic and the most highly leveraged banks are unresponsive to deposit insurance. As a result, implementing a deposit insurance scheme could have important competitive effects. |
| Keywords: | Deposit Insurance,Bank Risk-Taking,Leverage,Systemic Bank,Capital Buffer,Market Discipline,Too Big to Fail |
| Date: | 2014–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01074956&r=ias |
| By: | Martins, Pedro S. (Queen Mary, University of London) |
| Abstract: | In most countries, the unemployed are entitled to unemployment benefits only if they have previously worked a minimum period of time. This institutional feature creates a sharp change at eligibility in the disutility from unemployment and may distort the duration of jobs. In this paper, we evaluate this eligibility effect using a regression discontinuity approach. Our evidence is based on longitudinal social security data from Portugal, where the unemployed are required to work a relatively long period to collect benefits. We find that monthly transitions from employment to unemployment increase by 10% as soon as the eligibility condition is met. This result is driven entirely by transitions to subsidised unemployment, which increase by 20%, as non-subsidised unemployment is not affected. The effects are even larger for the unemployed with high replacement ratios or those who meet the eligibility condition from multiple short employment spells. |
| Keywords: | unemployment insurance, moral hazard, employment duration, big data |
| JEL: | J65 J63 C55 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10262&r=ias |
| By: | Olivier Allais (Laboratoire de recherche sur la Consommation - INRA - Institut National de la Recherche Agronomique); Yann Algan (ECON - Département d'économie - Sciences Po); Edouard Challe (CEREG - CEREG - Centre d'Etudes et de Recherches sur l'Espace Germanophone - EA 4223 - Université Sorbonne Nouvelle - Paris 3 - UPOND - Université Paris Ouest Nanterre La Défense); Xavier Ragot (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC)) |
| Abstract: | What are the costs of inflation fluctuations and who bears those costs? In this paper, we investigate this question by means of a quantitative incomplete-market, heterogenous-agent model wherein households hold real and nominal assets and are subject to both idiosyncratic labor income shocks and aggregate inflation risk. A key feature of our analysis is a nonhomothetic speci cation for households' preferences towards money and consumption goods. Unlike traditional speci cations, ours allows the model to reproduce the broad features of the distribution of monetary assets (in addition to being consistent with the distribution of nonmonetary assets). Inflation risk is found to generate signifi cant welfare losses for most households, i.e., between 1 and 1.5 percent of permanent consumption. The loss is small or even negative for households at the very top of the productivity and/or wealth distribution. |
| Keywords: | Money-in-the-utility,incomplete markets,inflation risk,welfare. |
| Date: | 2015–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01157168&r=ias |
| By: | Bams, Dennis (Finance); Bos, Jaap (Finance); Pisa, Magdalena (whu otto beisheim school of management) |
| Abstract: | Firms depend heavily on trade credit. This paper introduces a trade credit network into a structural model of the economy. In an empirical analysis of the model, we find that trade credit is an elusive insurance: as long as a firm is financially unconstrained and times are good, more trade credit enhances sales stability and insures against shocks to the firm’s suppliers. However, if a firm becomes financially constrained or times are bad, trade credit fails to insure against supplier shocks. Moreover, if the firm is low on cash, trade credit propagates shocks from a supplier to its customer. |
| Keywords: | trade credit, insurance, credit chains, spillover effects |
| JEL: | E32 G32 L14 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2016029&r=ias |
| By: | Florian Heiss; Daniel McFadden; Joachim Winter; Amelie Wuppermann; Bo Zhou |
| Abstract: | The trend towards giving consumers choice about their health plans has invited research on how good they actually are at making these decisions. The introduction of Medicare Part D is an important example. Initial plan choices in this market were generally far from optimal. In this paper, we focus on plan choice in the years after initial enrollment. Due to changes in plan supply, consumer health status, and prescription drug needs, consumers' optimal plans change over time. However, in Medicare Part D only about 10% of consumers switch plans every year, and on average, plan choices worsen for those who do not switch. We develop a two-stage panel data model of plan choice whose stages correspond to two separate reasons for inertia: inattention and switching costs. The model allows for unobserved heterogeneity that is correlated across the two decision stages. We estimate the model using administrative data on Medicare Part D claims from 2007 to 2010. We find that consumers are more likely to pay attention to plan choice if overspending in the last year is more salient and if their old plan gets worse, for instance due to premium increases. Moreover, conditional on attention there are significant switching costs. Separating the two stages of the switching decision is thus important when designing interventions that improve consumers' plan choice. |
| JEL: | C25 D12 G22 I13 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22765&r=ias |
| By: | Koeniger, Winfried |
| Abstract: | We use the Italian Survey of Household Income and Wealth, a rather unique dataset with a long time dimension of panel information on consumption, income and wealth, to structurally estimate a buffer-stock saving model. We exploit the information contained in the joint dynamics of income, consumption and wealth to quantify the degree of insurance against income risk. The estimated model implies that Italian households can insure between 89 and 95 percent of a transitory and between 7 and 9 percent of a permanent income shock. Compared to existing empirical estimates for the same dataset, our findings suggest that Italian households do not have access to significant insurance beyond self-insurance. |
| Keywords: | Consumption, Wealth, Incomplete markets, Insurance |
| JEL: | D91 E21 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2016:17&r=ias |
| By: | NAGORE GARCIA Maria desemparados; VAN SOEST Arthur |
| Abstract: | Using administrative data from Spanish Social Security, we compare the pattern and the determinants of individual unemployment durations and the stability of jobs found after unemployment before and during the recent crisis. We find particularly strong effects of the crisis on the hazards in the beginning of the unemployment spell. The groups hit hardest by the crisis are men, immigrants, older workers, and individuals with lower levels of education. The disadvantage of men is mainly due to the more pro-cyclical nature of men´s jobs. Decompositions show that the increase in average unemployment duration and the decrease in average duration of the new job during the crisis are not explained by changing characteristics of the individuals who become unemployed. |
| Keywords: | Unemployment durations; Job durations; Business cycle; Re-employment probability |
| JEL: | C41 E32 J64 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2016-14&r=ias |
| By: | Cara Orfield; Amy Mangum; Sheila Hoag; Sean Orzol |
| Abstract: | This report examines the implementation of Enroll America’s Get Covered Academy training program during the third open enrollment period. Findings describe the program and assess partners’ ability to implement, use, and institutionalize Enroll America’s strategies and tools. |
| Keywords: | Enroll America, outreach and enrollment, Affordable Care Act, training program |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:20e3dad2121444cc8aaeb9cf34c34104&r=ias |